The Case for Small Government: Musings of a Libertarian Economist

May 27, 2006

Economists and Self-Interest

A recent blog exchange begun by Alex Tabarrok, picked up by Brad Delong, and extended by Greg Mankiw raises the question of whether academic economsits are willing to put their money where their collective mouths are.

The issue is that economists broadly support expanded legal immigration. Alex suggested this is partly because economists are ethical. Matthew Yglesias, even while applauding the support for more legal immigration, expressed skepticism about economists' true motives. He suggests economists do not fear an influx of low skill Mexicans because economists do not compete in the marketplace with low-skill Mexicans. The true test of economists' ethics, Matthew argues, is whether we would expand legal immigration for highly trained ecoomists, those who would compete for our jobs.

Brad, Greg, and I agree: expanded legal immigration for economists, as well as scientists, engineers, and other highly skilled professionals, is good. Raise the H1-B quota a lot. Better yet, eliminate it entirely.

Then let's discuss another aspect of economists' self-interest.

Economists broadly, and libertarian economists in particular, argue for eliminating or reducing pratically every government program. Economists have little to lose personally from such policy changes.

Yet economists broadly, and even many libertarian-leaning economists, support government funding for economics research. Is that position defensible?

My answer is no. Economic research is a good thing, and knowledge is a public good that might be underfunded by the marketplace. But economists cannot argue convincingly against other bad government policies unless we hold ourselves to the highest possible standard.

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Comments

Good post Jeffrey but like most things libertarian or anarchist it would require a level of ethical behavior and personal responsiblity not to be expected from a populace used to depending on an omnipotent Government.

Of course, the three-economist sample listed are people at the top of their game, with little to worry about in terms of immigrant talent, working at universities that already can import pretty much any faculty they want.

And Miron probably doesn't need public funding: there seems to be endless dollars available for people who will generate right-wing economics stories. That's what we'd have instead of research if public grant funding was eliminated. Think-tank level propaganda. Judging from this blog, he'd be fine at it. I'm not qualified to judge his research.

It's not the research that's bad. Miron naver made that claim. Besides, if I told you that "My economics research will generate positive externalities. Therefore, you should let me dig into your pocketbook," you'd rightly dismiss that as a nonsequitur. Well, it's the same nonsequitur when the government makes that claim.

Actually,economists would lose personally from "eliminating or reducing pratically every government program." First there are a large number of economists employed in running these programs, and they would all compete with academic economists if the government jobs disappeared. Second, many economists do consulting regarding these programs. Third, many economists are associated with think tanks that raise their money from those involved in supporting or opposing these programs.

I worked at the FTC when Jim Miller was Chairman. He basically opposed many antitrust policies that subsantially contributed to incomes of many economists, including many former FTC employees (which he would soon be). It was basically an anti-self interested act.